One of Australia’s biggest mining and energy investors says the lithium boom is reminiscent of previous boom-and-bust cycles in uranium, rare earths and graphite, and he warns that most companies vowing to supply the world with lithium will not convert the price boom into a sustainable business model.
Lithium Carbonate prices in China have more than quadrupled over the past year on the back of stronger demand from traditional consumers in the ceramics and glass industry, and on hopes that modern battery technology, particularly in electric vehicles, will dramatically increase demand.
The price boom has seen scores of ASX-listed juniors switch from developing other mineral deposits to lithium over the past 18 months, but Todd Warren and the global resources team at Colonial First State Global Asset Management (CFSGAM) have not exposed any of the $2.5 billion they manage to Australian pure-play lithium miners.
“We see it not dissimilar to previous boom and bust cycles in various commodities, and certainly the ‘commodities of the day’,” he said.
“We have actually seen lithium have a run before and suddenly everyone has got lithium deposits that they are looking to exploit and I am here to tell you when you suddenly have got a couple of hundred lithium companies in the world, I can assure you that 99 per cent of them haven’t made a real go of it.
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